Google Breaking into HVAC Market

This is a Research Note from Omar Talpur, market Analyst at IHS, providing commentary on Google’s announcement it will be acquiring Nest Labs.

Google announced today it will buy Nest Labs, the smart home thermostat and smoke alarm maker founded by iPod inventor Tony Fadell, for $3.2bn. The acquisition ranks as the second largest in Google’s history, behind its $9.4bn acquisition of Motorola Mobility in 2012. 

Remote access and control thermostats are arguably the most hyped trend impacting the HVAC market currently. This news is likely to help further fuel interest in the growth in the connected thermostat market which was worth an estimated $190 million in the Americas, in 2013. 

Google’s venture into this market is likely to promote connected thermostats outside of North America which has developed much faster in comparison to other regions of the world. With smartphone and tablet popularity increasing, consumers are demanding the ability to connect with and control their home equipment from their mobile devices. 

Connected thermostats have been on the market for a number of years but have seen a surge in popularity with companies such as Nest Labs and EcoBee entering the market, and new products hitting the market from Honeywell and Venstar for example. 

Although much of the technology existed on the market in some form before these new entrants, the marketing and promotional effects of the features and functionality available in these thermostats has pushed market growth which is likely continue at least in the medium term.

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